Caroline Ellison, former CEO of Sam Bankman-Fried’s hedge fund, Alameda Research, declared this Tuesday that she committed fraud together with the former cryptocurrency magnate, founder of the exchange platform FTX and her one-time boyfriend. Ellison, who confirmed having had a relationship with the accused, is the star witness of the three former SBF collaborators, as the disgraced guru is known, who has been in the dock since last week to answer to nine charges, including them fraud and money laundering, which could cost him, if convicted, up to 20 years in prison. The other two close associates, who have also pleaded guilty to fraud, agreed to collaborate with the Manhattan prosecutor’s office like Ellison.
“Alameda took several billion dollars of money from FTX clients and used it for its own investments and to pay off debts it owed,” Ellison said about the platform that seemed ready to revolutionize the digital currency business. The former manager and accomplice of the alleged fraud detailed that SBF, 31, ordered Alameda to borrow some 10,000 million dollars from FTX clients to pay loans, disguising the transfer through a fraudulent balance sheet for investors, so that their bet seems less risky than it ended up being. FTX filed for bankruptcy last November, dragging down Alameda Capital, with a hole for approximately that amount.
Prosecutors asked Ellison why he believes FTX ran out of money in November 2022, to which he responded, elaborating on the alleged fraud: “Alameda had taken it to make our own investments and to pay our lenders.” The woman did not exchange a single look with her ex-partner, not even when she left the room during the lunch break after concluding the first part of her testimony, according to the Reuters agency. Ellison has a degree from Stanford, the university where SBF’s parents teach.
Bankman-Fried, portrayed in a biography of the best-selling author Michael Lewis as a guy with strange social skills and unable to name three of his firm’s advisors (“he only cared that they were available to sign documents at any time, at 3 in the morning,” Lewis says in the book, published last week), has pleaded not guilty to two counts of fraud and five of conspiracy, and although he has assumed that he made mistakes, he maintains that he never intended to steal funds. He is also accused of using funds stolen from FTX to purchase real estate and make significant donations to Republican and Democratic candidates and thus increase his influence in Washington, the other charge is violation of political campaign finance laws. He would also have incurred million-dollar bribes in China.
SBF’s defense has rejected the statement of the three former collaborators, arguing that they should have reported the alleged fraud at the time, not before the court. Gary Wang, FTX’s former chief technology officer, testified Friday that Bankman-Fried ordered him to allow Alameda to run a negative balance on FTX and borrow up to $65 billion from the exchange, privileges other clients lacked. The third collaborator of justice, the company’s former head of IT systems, Nishad Singh, will testify soon. The trial is expected to last six weeks.
While Bankman-Fried has written blog posts and given interviews to different media since his arrest in December 2022 – he was released under house arrest after paying a bail of 250 million dollars, forced to live at his parents’ house -, Ellison has kept a low profile since pleading guilty that same month. But SBF’s talkativeness cost him dearly. In July, the newspaper The New York Times published an article that cited reflections written by the woman before the collapse of FTX, in which she confessed to being overwhelmed by work and hurt by the romantic breakup with SBF. Bankman leaked them to the newspaper and paid dearly for his indiscretion: District Judge Lewis Kaplan, the same one he now sits before, revoked his bail for possible witness tampering and sent him from the family mansion in Palo Alto, California, to a crowded Manhattan jail, from which he goes to trial daily.
Follow all the information Economy and Business in Facebook and xor in our weekly newsletter
The Five Day Agenda
The most important economic quotes of the day, with the keys and context to understand their scope.
RECEIVE IT IN YOUR EMAIL
#exgirlfriend #founder #FTX #confirms #committed #fraud #Bankman #Alameda #hedge #fund